Earlier this week Acacia Research Corp. appeared to score at least a nominal victory when a federal judge handed down preliminary injunctions against five adult entertainment companies this week, stopping them from streaming media off their Websites, after they were held in default for not answering Acacia’s streaming media patent claims. Now Acacia apparently has a new infringement target in its sights – age verification services.
However, it is an open question whether the five companies that received injunctions still exist, or have suspended operations or gone out of business entirely.
Acacia vice president Rob Berman said July 18 that whether or not the defaulted companies are out of business isn't exactly going to prove an obstacle. If they've suspended operations or gone out of business, he said, that's one thing, but if they turn out to be trying to hide, that's something else entirely. And Acacia isn't going to stop with just content providers or AVS services, either.
"We have a team of researchers that does nothing but identify these groups," Berman said. "Content providers, AVSs, Webmasters, affiliate programs. Just because we haven't contacted you yet, it doesn't mean we haven't heard of you and that we're not going to get in touch with you."
Homegrown Video chief Spike Goldberg said that if Acacia is now going after AVS services, Webmasters, affiliate programs, and anyone partnering with content providers, it means Acacia is trying to make a claim that everything on the Internet is an infringement. "The patents are a stretch to start with, but the AVS thing is a real stretch," he told AVNOnline.com. "They've been running after (a few) hundred companies almost a year and of all the companies they've been trying to catch they've picked up 28? What is wrong with that picture?"
Several AVS services contacted by AVNOnline.com said they had not yet known about any Acacia licensing demands as of July 18, including a NetVerifier worker who asked not to be identified, who said they knew nothing of this move regarding AVSs until contacted by AVNOnline.com. But the parent company of OneVerify.com, an Arizona-based AVS, said that while their AVS division hadn't yet received a licensing demand, they were in the Acacia battle regardless – because their content program, TopBucks.com, had been an Acacia infringement target from the outset.
The five companies judged in default earlier this week were Extreme Productions, Lace Productions, WebZotic, Go Entertainment, and Wild Ventures. "They did not answer the original complaint," said Berman, adding that the default judgment and preliminary injunction showed "this problem" could not be ignored. "And it's not going to go away on its own," he continued. "Adult entertainment companies are going to have to deal with Acacia and they can't simply ignore us."
Goldberg likened the default judgments to "saying you won a boxing match because the boxer never entered the ring." But Goldberg also said the default judgments weren't exactly the final word on Acacia patent claims.
"I take this latest round of posturing as a desperate attempt to scare everyone into thinking the legal system has sided with (Acacia)," said Goldberg, who with VideoSecrets chief Greg Clayman formed the Internet Media Protective Association, both to fight the Acacia patent claims and to help consolidate inter-industry cooperation. "In fact, they received a default judgment without any evidence."
Extreme Productions turns out to be the corporate entity under which operates a tiny, obscure company called Ultimate Video, according to some industry insiders, but no contact information for this company could be found. Lace, WebZotic, Go, and Wild Ventures did not return queries for comment from AVNOnline.com. WebZotic is actually now known as MoMo Systems, WebZotic having bought MoMo in 2000 and ultimately shifted all operations under the latter banner.
"We have to find them and we have no doubt that we will," Berman said. "If they've gone out of business obviously they're not using our technology anymore, so there's nothing to prohibit. But if they're just hiding or opening under a different name we'll find them and enforce the judgment."
Goldberg called that, too, a sign of desperation, adding that challenging the Acacia patent claims in court is "a right" and people "should know there are people doing that, and they should contact us.”
But an adult industry insider who is familiar with MoMo Systems but asked not to be identified confirmed WebZotic is buying MoMo and changing the entire operation's name to MoMo, which is Japanese-based. He also said Wild Ventures actually hadn't been in business for several years.
"This company," the insider said of Acacia, "did not do any due diligence. They apparently went to Websites, found names, picked names randomly, and never checked to see (how many of) these companies were in business at all." He also suggested Acacia's strategy was likely to get default judgments regardless as a wedge to pressure other, actual respondents into settling with Acacia.
Berman, meanwhile, claims to have sent a letter to what he called at least sixty age verification services July 2, a copy of which was made available to AVNOnline.com. It aims to hold AVSs, whose clients include streaming media content Websites, liable to license with Acacia or face litigation.
"Your Age Verification Service provides access to Websites that offer digital video content for viewing and/or download via your Website(s)," the letter said. "This activity is covered by Acacia's DMT patent portfolio. In order for you to legally continue to provide access to these video services, you need a license from Acacia."
It might be thought that this claim would be difficult to bring off in court, in light of such recent actions as a court ruling a pair of peer-to-peer networks can't be held directly liable for their users who use them to swap copyrighted material like music files. But Berman said that's not exactly the same area of the law.
"We're talking patent infringement here. And there are two types of infringements, direct infringers and contributory infringers," he said. "With respect to the AVSs, they know what their member sites are doing, so they're providing links in their systems to sites that are infringing our patents. It's a very different area of the law and very different fact situation. They're inducing; the AVSs are clearly inducing people to infringe…by providing the links. They know there's video streamed on their member sites, and they're inducing infringement by providing links to those sites."
Cyberheat, Inc. marketing director Quentin Boyer, whose company operates OneVerify.com and whose TopBucks.com is fighting an Acacia action, said the Acacia case could take as much as "a couple of years" to finish. "Their entire business model is based on intimidating people into paying royalties," Boyer said of Acacia, noting that the technique goes back to at least the 1950s.
But Boyer also suggested that the Acacia claim could end up being invalidated by an area of patent law known as prior art. "Any sort of patent claim someone makes is subject to scrutiny based on its validity," he said. "If you can prove to somebody, demonstrate that the technology, the patent they're claiming was already in use prior to being patented, that's called prior art, and that would invalidate their claim."
The default judgments and injunctions mean Acacia is now down to 19 active parties in their current litigation against adult entertainment content, including Homegrown Video and VideoSecrets. Another hearing in that dispute is expected at the end of July. "We will begin the discovery process and we are eagerly anticipating our day in court, where we will invalidate these patents," Goldberg said.
Acacia also said they signed new licensing agreements for the streaming media patents with Babenet, Ltd. and White Sands Communications, though Babenet has been believed to be inactive over the past several months.
The IMPA issued a formal statement July 17 reiterating Goldberg's original comments, saying both the default judgments and preliminary injunctions mean nothing, since they were entered against companies who never responded to the Acacia litigation.
"No evidence was heard or presented," the IMPA statement said. "In fact, these judgments were not a ruling on the merits of the case by the district court judge; rather, they are default judgments entered on a docket as an administrative action by a clerk of the court.
